The URL can be used to link to this page

Home My WebLink AboutI. A. PROPOSED FY 2025-26 RESOURCE MANAGEMENT PLAN (Budget) 3.25.2025PROPOSED FY 2025-26 OPERATING BUDGET & CIP City of Virginia Beach Kevin Chatellier Director of Budget and Management Services March 25, 2025 Agenda •Council Direction Recap •Operating Budget •Capital Improvement Program •School Budget Summary •Revenues •Next Steps •Questions & Discussion 2 City Council Direction- FY 2025 Reconciliation Operating Budget Priorities: •30 additional Firefighter Recruits •Annualization of Parks after Dark at all three locations Report out of information: •EMS Sustainability Plan •Tax and Fee Diversification •ITA Feasibility Study •Market Salary Survey •Town Center SSD 3 City Council Retreat- CIP Focused Guidance and Direction: •Be mindful of debt capacity •Fulfill promises while being mindful of current needs •Review dedications with healthy balances for possible redirection •Consider right sizing project scopes and/or delaying projects to set realistic expectations •Prioritize public safety, transportation, and quality of life to maximize benefits to residents •Explore new revenue sources while being mindful of the real estate tax rate 4 Principals of Budget Development •Maintain promises, meet current demands, and sustainably plan for the future. •Maintain lowest real estate tax rate in the region •Provide for the workforce •To accomplish these goals: •Redirect and reprioritize •Make targeted reductions •Increase and diversify revenue 5 FY 2025-26 Operating Budget 6 Operating Budget Summary Public Safety 13.6% Convention & Visitors, Economic Development 2.0% City General Fund and Flood Protection Debt Service 2.5% Education 44.0% Financial/General Government 8.2% Human Services/ Health/Housing 7.6% Parks & Recreation, Libraries, Aquarium, & Cultural Affairs 4.5% Planning/Public Works/Public Utilities 13.3% City Capital Projects 4.3% Total Budget: $2,785,436,215 Total City FTEs: 7,738.82 Total VBCPS FTEs: 10,669.21 7 Budget Controlled for Inflation 8 $2,086 $2,785 $1,970 $1,977 $2,059 $2,110 $1,300 $1,500 $1,700 $1,900 $2,100 $2,300 $2,500 $2,700 $2,900 2018 2019 2020 2021 2022 2023 2024 2025 2026MillionsFiscal Year Budget Inflation Adjusted (Constant Dollars) Rate Reduction Impacts 9 Fiscal Year Total Parks and Rec ARP Outdoor Initiative Flood Protection Stormwater Operations General Fund Change 2020-21 101.75 3.48 0.90 0.47 - 2.50 94.40 - 2021-22 99.00 3.48 0.90 0.47 - 2.50 91.65 (2.75) 2022-23 99.00 3.48 0.90 0.47 4.10 2.50 87.55 (4.10) 2023-24 99.00 3.48 0.90 0.47 4.10 2.50 87.55 - 2024-25 97.00 3.48 0.90 0.47 4.10 2.50 85.55 (2.00) Grand Total (4.75)- - - 4.10 - (8.85)(8.85) Budget Controlled for Inflation- General Fund 10X Indicates Tax Rate Reductions cumulative 8.85¢ $1,134 $1,157 $1,192 $1,184 $1,558 $1,134 $1,139 $1,145 $1,122 $1,086 $1,104 $1,152 $1,181 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 18 19 20 21 22 23 24 25 26Millions Fiscal Year General Fund Operating Budget Budget Inflation Adjusted (Constant Dollars) Operating Budget Drivers •Tax Relief Programs •FY 2025 Reconciliation Priorities •Public Safety and City Security •Keeping the Lights On •Workforce Investment 11 Tax Relief Programs •Veterans Tax Relief •Mandated by the Commonwealth •$36 million equal to 4.4¢ of Real Estate Tax Rate •Increase of $8.4 million •Elderly and Disabled Tax Relief •Local option •$15.6 million equal to 1.9¢ of Real Estate Tax Rate •Updated income thresholds per policy •Example, Tax Freeze now $108,075 •Combined $52 million or 6.3¢ of Real Estate Tax rate 12 Reconciliation Direction and Initiatives Operating Budget: •30 Fire Fighters- $2.6 million •Parks after Dark- $0.6 million Report out of information: •Tax and Fee Diversification •ITA Feasibility •Market Salary Survey •Town Center SSD Tax Rate •EMS Sustainability Options 13 Public Safety & Security Traditional Public Safety: •Enhanced medical screenings •Fire – Firefighters, Incident Command System, etc. •Police – Tech Manager, Speed Camera Enforcement, etc. •EMS – Compassionate Billing- $14 million •Special Revenue Fund •33.5 FTEs •Equipment replacement plan •Agreement continuing partnership with volunteer rescue squads Workforce and Public Places: •Security Contracts •Cameras – Aquarium and Parks 14 Keeping the Lights On •City Garage •Parts, Contracts, etc. •Mechanic Staffing (4 FTEs) •Vehicle Replacement •Custodial Staff (6 FTEs) •Construction Inspector Staff (2 FTEs) •Concrete Maintenance Crew Staff (7 FTEs) •IT Service Continuity Contracts •Microsoft, Adobe, Accela, etc. 15 Health Insurance- Budget Driver 16 0.00% 2.50% 5.00% 7.50% 10.00% 12.50% 15.00% 17.50% 20.00% $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 2019 2020 2021 2022 2023 2024 Proj 2025 Proj 2026 School Employer Contributions City Employer Contributions City Health Fund Balance VBCPS Health Fund Balance City Employer contribution increase 3% No proposed increase for employee contribution next year Workforce •Market Salary Survey was presented in January 2025 •Option 1: 95% of Market •48% of workforce •Estimated Cost - $32 million •Option 2: 105% of Market • 76% of workforce •Estimated Cost: $70.8 million •FY 2025-26 Proposed Budget includes: $34 M •Market Salary increase for sworn public safety and lowest classifications on the Compensation Plan •Step increase for sworn public safety and 3% general increase for remainder of workforce 17 Workforce Paid Time Off- January 2026 •Adopt the Commonwealth of Virginia’s holiday calendar: 14.5 Days •Elimination of 3 Flexible Leave Days •Reduce confusion on City, Constitutional Offices Opening, Court acknowledged Holidays •Proposed change for City Workforce to move from current combined Paid Time Off (PTO) leave accrual, offered to new hires, to leave accrual system currently offered to new hired positions classified as “hazardous duty” and staff employed prior to 2014. Years of Service Current PTO Proposed Annual Proposed Sick 0 to 5 12 hr/ month 8 hr/ month 8 hr/ month 5 to 10 14 hr/ month 10 hr/ month 8 hr/ month 10 to 15 16 hr/ month 12 hr/ month 8 hr/ month 15 to 20 18 hr/ month 14 hr/ month 8 hr/ month 20 or More 18 hr/ month 16 hr/ month 8 hr/ month 18 Sustainably Supporting Operating Budget Needs Various Fee Adjustments •EMS Compassionate Billing •Planning Department – Short Term Rental Staff •Parks and Recreation •Water and Sewer Rate – Year 3 of 5 Plan •Stormwater ERU – 8.9¢ •Previously frozen until FY 2028-29 •Due to inflation, without some adjustment reductions would need to occur 19 Budget Controlled for Inflation- Stormwater 20 $46,292,161 $57,500,383 $43,865,018 $43,558,674 $30,000,000 $35,000,000 $40,000,000 $45,000,000 $50,000,000 $55,000,000 $60,000,000 18 19 20 21 22 23 24 25 26Millions Fiscal Year Stormwater Operating Budget Budget Inflation Adjusted (Constant Dollars) Overall Net City FTE Growth 95.14 Added through Bill Payer:•EMS – 33.5 FTEs•Public Works – 18 FTEs (VDOT, Parking, Stormwater, etc.)•Planning – Short Term Rental 3 FTEs•Housing – 2 FTEs•Public Utilities – 3 FTEs•Police Camera Enforcement & Stop Arm – 6.4 FTEs•Commissioner of Revenue – 1 FTE•Convention and Visitor’s Bureau – 0.86 FTE General Fund adds: •Fire – 30 Firefighter Recruits •Public Works 10 FTEs (Custodians, Fire Mechanics, etc.)•Police 2 FTEs (Tech Manager, FOIA Staff)•Human Services 1 (Juvenile Detention Counselor) •Reductions of (14.86) elsewhere offset staff recommended adds 21 FY 2025-26 to FY 2030-31 Capital Improvement Program 22 Information and Pre-Brief for Retreat •Total General Government CIP gap based on revised estimated reported as $1.3 billion •Inflation specific to CIP related goods and materials(Producer Price Index PPI) has increased nearly 200% since 2018 •Construction bids offered by market are routinely higher than budgeted allocations based on pre-pandemic CIP programming •Example – Shore Drive III, Elbow Road II B&C, Winston Salem Avenue, etc. •Debt Metrics cannot support fully debt financing the gap 23 January 2025 Retreat Guidance Guidance and Direction: •Be mindful of debt capacity •Fulfill promises while being mindful of current needs •Review dedications with healthy balances for possible redirection •Consider right sizing project scopes and/or delaying projects to set realistic expectations •Prioritize public safety, transportation, and quality of life to maximize benefits to residents •Explore new revenue sources while being mindful of the real estate tax rate 24 Debt Capacity 25 5.8%6.8%6.3% 7.9%7.3%8.0% 10% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 Debt Service to General Government Expenditures Projection Limit Review Dedications & Fulfill Promises •Dedication capacity large part of discussion in last year’s budget process •The following dedications have been routinely referenced as having the most flexibility for a partial redirect without hurting original program intent: •Open Space – Established in 2001 to purchase land for preservation of natural areas, tree canopy, and development for parks and recreational activities •Town Center TIF – Established in 1999 to finance and support infrastructure development of Town Center •Agriculture Reserve Program – Established in 1995 to purchase development rights of property to preserve around 20,000 acres of farmland •Proposed Operating Budget includes partial redirection from the capacity of these dedications totaling $11.8 M to support the CIP 26 Open Space Retention of 0.17% of Meal Tax Dedication still allows: •Keeps staff and operations at 100% •Meets existing/future debt obligations •Projected revenue exceeds expenditure each year returning to $2 million by FY 30-31 •Maintains starting fund balance of $19 million (Including CIP Project Balance) •Maintains capacity for future options 27 Category FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 Revenue 3.15 3.24 3.34 3.44 3.54 3.65 3.76 Expenditures (Existing)1.78 1.59 1.71 1.40 1.42 0.93 0.95 Expenditures (New)0.65 0.65 0.65 0.65 0.65 0.65 0.65 Difference 0.72 1.00 0.98 1.38 1.47 2.06 2.16 CIP Funds Available 6.00 - - - - - - Cumulative Fund Balance $19.03 $21.32 $22.96 $24.99 $27.11 $29.83 $32.63 Town Center TIF Retention of 60% of TIF Dedication still allows: •Meets existing debt obligations •Projected average of $3.7 million revenue exceeded expenditure each year •Maintains capacity for future development within 6-year CIP •Maintains starting fund balance of $20 million Category FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 Revenue 10.87 11.25 11.58 11.93 12.29 12.66 13.04 Expenditures (Existing)4.40 4.35 4.15 2.37 2.28 2.24 2.20 Expenditures (New)5.50 4.65 4.78 4.92 5.06 5.21 5.36 Difference 0.97 2.25 2.65 4.64 4.95 5.21 5.48 Cumulative Fund Balance $19.58 $21.83 $24.48 $29.11 $34.06 $39.27 $44.74 28 Agriculture Reserve Program (ARP) Retention of 0.6¢ Real Estate Dedication allows •Keeps staff and operations at 100% •Meets existing debt obligations •Maintains capacity for annual enrollment estimate of 300 acres •Maintains $990,000 per year support of stormwater ditch maintenance •Maintains starting fund balance of $23 million Category FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 Revenue 7.80 8.98 7.50 6.71 6.59 6.25 8.02 Expenditures (Existing)5.85 7.17 5.39 4.37 4.08 3.05 4.63 Expenditures (New)2.10 2.36 2.62 2.88 3.16 3.44 3.73 Difference (0.16)(0.54)(0.51)(0.54)(0.64)(0.24)(0.35) Cumulative Fund Balance $23.41 $22.87 $22.36 $21.82 $21.18 $20.94 $20.59 29 How did capacity occur? •Dedication growth over time: •Growth in revenue combined with the retirement of debt (existing obligation) •Redirect creates $11.8 million in annual capacity for potential use in leveraging as a means of financing tool for the CIP Fund FY 09-10 FY 14-15 FY 15-16 FY 19-20 FY 24-25 FY 25-26 Open Space 3,985,256 4,756,226 2,424,755 5,591,945 7,781,454 3,146,556 ARP 4,824,373 4,474,353 2,869,337 5,146,034 7,085,160 4,951,492 Town Center TIF 5,729,830 5,367,921 6,377,444 8,033,042 10,478,916 6,518,679 30 Right sizing projects scopes, delaying, or deleting: Deleted four projects that were partially funded: •Ferrell Parkway •Princess Anne VII-A •Indian River/Princess Anne Intersection Improvements •Centerville Turnpike Phase III Delayed/Exploration of Rescope partially funded projects: •Elbow Road Extended Phase II-D •Rosemont Road Phase V •Indian River Road VII-A & VII-B •Burton Station Road Improvements III •Local capacity closes gap on Cleveland Street Improvements IV and Independence Blvd/Pleasure House Road Intersection with residual preserved 31 6-Year CIP Planning with total picture in mind FY 2026-28 •Minimize increase of programmed bonds to address gap identified •Utilize more pay-go and fund balance to address needs FY 2027-29 •Redirect from existing programmed project •Reduce scope, delay, delete FY 2030 •Full issuance of bond referendum •Debt metrics at highest point FY 2031 •Retirement of debt annually reducing stress on debt metrics •Capacity for future projects 32 6-Year CIP: General Government, FY26-31 FY 2026-28 Only bond program increase: •Pembroke Garage (agreement), $25M (bill payer) •Convention Center Maintenance,$31M (bill payer) Pay-go and fund balance toward projects considered as “Keeping Lights On” •Central Plant Loop (restored), $5.9M •Rudee Weir (restored), $2M •Fire Apparatus IV-additional, $7M •Voting Machine Replacement, $2.9M •Fire Station Alerting, $1.7M •Personal Property/Real Estate Billing, $9.9M •Sports Center Maintenance, $7.3M •US Army Corps Study (resiliency), $2M FY 2027-29 Redirection from existing programmed projects: •Deleted: Ferrel Parkway, PA VII-A, Indian River/PA intersection, Centerville III •Delayed/Rescope: Elbow II-D, Rosemont V, Indian River VII-A and B, Burton Station Redirect to projects: •Cleveland St., Independence Blvd./Pleasure House FY 2030 •Full issuance of bond referendum •Debt metrics at highest point FY 2031 •Retirement of debt annually reducing stress on debt metrics •Capacity for future projects 33 6-Year CIP: Major Projects Sustainably Planning for Future FY 2026-28 Pay-go and fund balance to close gaps and design projects: •LETA, $8.7M Design •Indian River Road Safety, $9.2M Design •VB Trail, $16M (fully funded) •Courthouse Modernization, $15M Design FY 2030 •Full issuance of bond referendum •Debt metrics at highest point FY 2031 Debt capacity becomes available for full funding with dedicated bill payer: •LETA, $83M •Indian River, $130M •Courthouse, $170M Capacity for possible future projects: Coastal Resiliency, Aquarium (Existing), VB Trail Ph. II & III, Roadway Projects, 911 Backup Call Center, etc. 34 Major Projects Fund- Proposed Revenue Sources: •Real Estate (ARP) $0.3¢ per $100 assessed •Real Estate (TIF) 40% •Meals Tax (Open Space) 0.27% •Meals Tax Increase 0.5% •Total annual revenue $21 million to be leveraged as a sustainable on-going bill payer to support priority projects determined by City Council: •Public Safety •Transportation •Quality of Life projects 35 6-Year Coastal CIP: Sustainability and Tax Diversification FY 2026-2031 Pay-go and fund balance only source for use: Adopted FY 2025-2030 Coastal CIP- 6-year annual average of General Fund Cash is $7.6 million. Dependent on availability of Fund Balance Proposed FY 2026-31 Coastal CIP- 6-year is balanced using a personal property pleasure craft tax dedication. Proposed increase is from $0.000001 per $100 assessed value to $1.50 per $100 assessed value on pleasure craft vessels larger than 18 ft. (estimated $4.3 million annually) Tax rate is in line with the tax applied to commercial vessels and more aligned with the larger vessels requiring the frequent dredging to navigate the waterways 36 CIP SUMMARY- 6-year total $5.6 Billion 37 Buildings & Assets 10% Coastal Projects 3% Economic and Tourism Development 9% Information Technology 5% Parks and Recreation 7% Roadways 18% Water & Sewer Utility 10% Stormwater & Flood Protection 23% Schools 15% PROGRAMMED FUNDING Virginia Beach City Public Schools 38 Proposed Budget includes Superintended Estimate of Needs (SEON) •Proposed Budget: •3% compensation •$8 million increase toward health insurance fund •Utilization of attrition savings for first time ($11.8 Million) •Personnel (44.96 FTE increase): •15 Security Positions for Elementary Schools •19.8 English as Second Language Assistants •Reduction of 32.5 Custodian Positions (Vacant) •CIP: •Revised CIP after City/School Joint Modernization committee meeting •Reduction in requested programming of $100+ million in additional bonds •Keeps programmed CIP at levels approved in Adopted FY 2024-25 CIP City Manager’s Proposed Changes to SEON •Additional $2.9 million in Revenue Sharing Formula •Placed in a reserve within the School General Fund with recommendation to send to CIP or potentially reduce PFRBs •Additional $10.8 million in State Funding •State funding increased from Governor’s Proposed Budget •To support existing instructional support staff •Placed in a reserve within the School General Fund with recommendation to send to CIP or potentially reduce PFRBs •Since Proposed Budget went to print, discussions by Schools seem to indicate operational needs are higher priority Revenues 41 Revenue Highlights Program User Fee Adjustments Current Proposed Parks and Recreation Fees (various)Varied Varied Short Term Rental Fee $200 $500 EMS Compassionate Billing -Varied by type Special Event Permit Fees $75/$250 $150/$500 Water & Sewer Year 3 of 5 Varied Varied Stormwater ERU 49.3 cents daily 58.2 cents daily Tax Rates Current Proposed Meal Tax 5.5%6.0% Personal Property Pleasure Boat > 18 feet -$1.50 per $100 of assessed value Real Estate 97 cents 97 cents 42 Comparison of Tax Rates Tax/Fee Virginia Beach Chesapeake Norfolk Portsmouth Suffolk Hampton Newport News Real Estate (per $100 /A.V.)$0.97 $1.03 $1.23 $1.25 $1.07 $1.15 $1.18 Personal Property (Vehicles & Business)$4.00 $4.08 $4.33 $5.00 $4.25 $4.50 $4.50 Personal Property (Machinery & Tools)-$0.64 $1.70 $1.50 $0.63 $1.23 $1.25 Personal Property (Boats)$1.50 $0.09 -* Boat License $0.50 $1.50 -*Boat License $1.00 Automobile License Registration $30.00 $26.00 $31.00 $32.00 $26.00 $35.00 $26.00 Cigarette (per pack)$0.75 $0.65 $0.95 $0.95 $0.75 $0.85 $0.85 Solid Waste Fee (monthly)$30.55 -$28.51 $29.16 $25.25 $38.05 $31.63 Meals 6.0%6.0%6.5%7.5%6.5%7.5%7.5% Stormwater (daily fee)0.582 0.373 0.488 0.304 0.247 0.389 0.403 Admissions 10.0%10.0%10.0%10.0%10.0%10.0%10.0% Hotel 8.0%8.0%8.0%8.0%8.0%8.0%8.0% Hotel Flat Tax $2.00 $1.00 $3.00 $3.00 $1.00 $2.00 $1.00 •VB boat tax proposed to be for boats in excess of 18 feet.43 Next Steps 44 Date Event April 1 Council Workshop – Budget and CIP Presentations April 8 Council Workshop – Budget and CIP Presentations April 10 Council Workshop– Budget and CIP Presentations April 15 Council Workshop– Budget and CIP Presentations April 16 Public Hearing at Virginia Beach Convention Center April 22 Council Workshop– Budget and CIP Presentations Public Hearing April 29 Council Workshop– Budget Presentations & Discussions May 6 Reconciliation Workshop May 13 City Council Votes on Budget Thank You Questions & Discussion 45